City’s rental housing market remains stunted due to Covid-19 pandemic

Gurugram In the wake of Covid-19 pandemic, the city’s rental housing market -- recognised as one of the most lucrative housing markets in Delhi-NCR -- is decelerating.

Gurugram In the wake of Covid-19 pandemic, the city’s rental housing market -- recognised as one of the most lucrative housing markets in Delhi-NCR -- is decelerating. Experts and property owners have attributed the new trend to returning of salaried professionals, most of who are allowed to work from home, to their native towns and only a few takers for rental properties in the city.

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With the older lease agreements expiring every month, an increasing number of tenants are choosing to leave the city, even if just for the time being. “Most are young or middle aged professionals in corporate jobs. They make up the bulk of my business, and across Gurugram it is the professional class that drives the demand for rental housing,” said Kuldeep Khokri, who owns a property brokerage firm in Palam Vihar.

“Corporate professionals don’t want to stay back in this atmosphere, and new people are not shifting here for work. This month, I made only 50% of the deals as compared to March,” he added.

With most corporate offices in Gurugram enforcing work from home practices for the foreseeable future, many professionals in the salaried segment say they do not find it financially viable to continue renting a house in the city.

Harinder Cheema, who works with a city-based corporate law firm, said, “I have been allowed to work from home till at least December. So I came back to my parents’ house in Chandigarh. I am in no hurry to return to Gurugram. I’m saving money and there’s a sense of security, being with family during the pandemic.”

Some property agents have now begun adjusting their rates in hope of procuring more clients. Kartar Adhana, an independent broker operating in and around Sector 29, was earlier charging 15 days’ rent amount from clients as brokerage. “Now, I have started charging only 10 days’ rent as my fee. Since I do the business on my own, I can cut the fee a little. But many brokers in the city are actually middlemen who work for big property dealers. They are the ones who are really stuck,” Adhana said.

At least a dozen other brokers, either employed at small firms or providing services to them independently, and who rely on fixing rental deals as their main source of income, complained of work having dried up. They feared a much longer wait for business to pick up than they had anticipated during the Covid-induced lockdown.

“We thought that business will pick up after lockdown, once the metro and offices open up. This hasn’t happened. New lease agreements are not being signed at the same rate. I am looking for other work now,” said 24-year-old Dev Yaduvanshi, who works part-time in the Sikanderpur area, showing vacant homes to prospective tenants for established brokers.

The slowing down of rental market has also forced landlords to renegotiate rents with existing and newer tenants. Dheeraj Dagar Chaudhury, a property owner who rents out builder-floor homes in Sushant Lok, said, “One of my lessees is vacating the home at the end of this month, and I have not been able to find a new tenant. This has not happened in five years since I started giving it out. In another case, I brought down the rent of a 2BHK house in Sushant Lok to Rs 20,000, because the tenant is facing some financial problems after salary cuts. I was charging Rs 25,000 earlier.”

These testimonies stand in sharp contrast to a January’s report, which pegged Gurugram as a key market for rental housing in Delhi-NCR. An analysis by real estate consultant Anarock showed that the rental yield — or annual return on investment — for most rental properties in Gurugram was 3.5%, higher than the national average of 3%. In Delhi, the rental yield at the time stood at 2.2%. The report also showed that 45% of real estate investments in Gurugram happened with the view of earning rental income from the property after purchase.

“Those who have invested in property with rental yield in mind should reconcile to a longer wait before they can recoup the investment. There will be a lot more empty homes now, and that will drive down prices further,” said Khokri, anticipating that things will remain this way until work from home practices continue at corporate offices.